A look at the economics of breeding, selling and racing thoroughbreds, and at the various players in the racing game, from race track operators to state governments to those of us who are crazy enough to own and/or place a bet on these gorgeous, courageous equine athletes.

Tuesday, November 16, 2010

Very comprehensive article by Bill Finley in the Thoroughbred Daily News Magazine today with much detail about what we already know. The modern thoroughbred, at least in the US, runs less often each year, and far less often over a career, than race horses did half a century, or even a generation, ago.

The statistics, many from the Jockey Club Fact Book, are absolutely clear. In 1950, the 22,388 horses that raced averaged 10.9 starts for the year; in 2009, that average was 6.23 starts, a decline of 43%. In the same period, the number of races run has doubled, from 26,932 in 1950 to 54,121 last year, and the number of thoroughbreds that actually started at least one race during the year has increased by 220%, from 22,388 to 71,662.

As I and many others have said before, that's too many horses and too many races. Even with the huge increase in the foal crop over the years (now beginning, at last, to shrink), average field size has actually decreased since 1950, from 9.07 starters per race to 8.27 last year, a decrease of 9%.

And the number of starts that a horse makes in its career also continues to decline, to somewhere in the mid-teens. Clearly, horses today don't run as often or for as long. Finley's article raises some possible reasons.

The first possibility, which one often hears around the backstretch is that "we're not breeding as tough a horse as we used to." That's correct to some degree, but not in the sense that equine genetics have somehow changed over the past half-century. Evolution doesn't happen that fast. Horses have been around for thousands of years, and thoroughbreds have been around for hundreds of years. It's not that thoroughbred genetics are suddenly falling apart, but rather that the particular thoroughbreds being bred, and hence their descendants that are populating North American race tracks, are being systematically selected for a combination of precociousness, speed and, as part of the package, a lack of durability. Since the explosion of the bloodstock market in the 1970s and 1980s made it more profitable to breed than to race, and since the emergence of Mr. Prospector as the dominant sales stallion, the particular gene combinations embodied in North American race horses have indeed changed, and we see the results breaking down on the track every day.

This tendency is exaggerated by the rush to stud of stallions that didn't even have double-digit numbers of races before they were retired to cash in at the breeding shed. Take, for example, some of the new stallions for 2011. As Jeff Scott points out in today's Saratogian, the top two stallions for next year, Blame and Quality Road, each have only 13 lifetime starts, and Quality Road showed both distance limitations and temperament problems during that brief racing career. Good luck with his colts in the classics. As for some other stallions-to-be, Wood Memorial winner Eskendereya, sprint sensation Majesticperfection, and Iowa Derby winner Concord Point each "retire" after exactly six lifetime starts, while Travers winner Afleet Express is the grand old man of three-year-old retirees, with seven starts.I guess the theory, even in a down market, is breed 'em to 150-200 mares a year, rake in the money for three years, until someone notices how their progeny are actually doing, then ship them off to Japan, Korea, China, Turkey, etc.

Speaking of shipping, we've been exporting many more thoroughbreds from the US than we've been importing for many years. Last year, more than 3,000 horses were exported, while fewer than 1,000 were imported. And the flow has been systematically skewed, with longer-distance pedigrees leaving, until the point has been reached that there are hardly any true distance sires remaining in the US. That's reflected in the paucity of distance races at US tracks as compared to, well, anywhere.

But even taking into account the shift in breeding patterns, there are other factors that affect race horses' durability and frequency of running. The use of Lasix and other drugs is justified by vets and trainers who say that horses need it to race. If that were true, why are horses running so much less frequently now that they're all on Lasix? For a start, Lasix causes a horse to lose something like 30 pounds of fluids, and it takes several weeks for the horse to regain that weight. And, in place of the half-century old cure for aches and pains and bleeding -- giving the horse time off -- trainers now use Lasix and other drugs to squeeze as many starts as they can out of a horse before it falls apart completely.

A third reason for fewer starts per horse, at least according to Finley, is trainers' focus on keeping their win percentage up. The old practice of racing a horse into shape might have worked when owners' attention spans lasted the length of a horse's career, rather than just to the next race. But today, trainers don't want to run unless they have a good shot at finishing in the money and keeping their numbers up. If one trainer doesn't do that, he or she will very soon lose business to someone who does, and who, as a result, has better numbers. So horses sit in the barn until just the right race comes up.

Some of these problems are pretty intractable. Many of the newer owners in the game want results, and they want them now. (I'm not immune to this myself; anyone running a racing partnership knows that keeping the partners happy with wins and in-the-money finishes in very very important.)

But some of the trends can be reversed. Fewer foals. Fewer races. A ban on raceday medication, like that in most of the rest of the world, introduced over time to allow breeders and buyers to adjust to the new requirements, might well shift breeding patterns to emphasize toughness. Purse subsidies skewed to longer-distance races might make some distance stallions viable. All these changes would take time to percolate through the system that's evolved over the past half-century, but they could result in the return of the tough, durable horses of yesteryear.

Sunday, November 7, 2010

In more chivalrous times, or at least so one would like to think, those in positions of power and authority who did wrong would offer their resignations, or, in Japan at least, their lives, as tokens of atonement. If that grand old tradition were still in vogue, here's a list of those who should, as of Monday morning, be without a job:

Churchill Downs CEO Bob Evans and track president Kevin Flannery, for not exercising their authority to bar local favorite Calvin Borel from the premises after his outrageous brawling Friday afternoon.

Chief Steward John Veitch for letting Borel off with a $5,000 slap on the wrist and, more importantly, for failing to protect the bettors' interests in the Ladies Classic by scratching Life at Ten, declaring her a non-starter, or having her run for purse money only.

Track Superintendent Ray Lehr, for letting the BC turf races be run on a course that many jockeys said was less than ideal and that may have led to the death of Rough Sailing, whose feet went out from under him in the clubhouse turn of the Juvenile Turf and who later was put down because of a broken right humerus (the long bone in the upper part of the foreleg).

And, last, but by no means least, BC President Greg Avioli, his general counsel and his high-profile Lexington KY law firm, for failing to negotiate a television contract with ABC/ESPN that would have prevented the ludicrous gap in national TV coverage at 3:30, when ESPN continued to show a football game as coverage was supposed to switch from ABC.

These are the biggest two days in North American racing, and they were run by folks who appeared not to know what they were doing. Just step aside, guys; replacements couldn't do any worse.

Let's take the issues one at a time.

First, Calvin Borel. His conduct in the paddock after the BC Marathon was completely out of control. (Story and revealing video here.)Fighting like that would get you a red card in soccer, the heave-ho in baseball, ejection from the game in football or basketball, and, well, OK, a five-minute major penalty, maybe, in hockey. And it should have resulted in Borel's being thrown out of the ball game -- the Breeders Cup -- as well. Trainer John Sadler, whose filly Tell a Kelly was the fourth choice in the Juvenile Fillies and which finished a lackluster 7th with Borel aboard, had no hesitation in telling the TV audience he wished he'd been able to change jockeys, so it probably wouldn't have been much, if any, of a disadvantage to require new riders on the horses that Borel had been named on. In his four Breeders Cup rides after the fight, Borel finished 7th, 9th, 10th and 9th, so it's not as if any of the many other talented riders available at Churchill this weekend would have done worse.

Perhaps the stewards were constrained by the requirements of due process; they would have had to give Borel and hearing, and perhaps allow for an appeal before applying any penalty. (in the event, they didn't even try to do that after the fact, getting Borel to waive his rights to a hearing and settle for a $5,000 fine, an amount that, for an athlete at his level, is trivial.)

But Churchill Downs management had no such limitations. As another Churchill Downs Inc. track, Calder, showed back in 2006, track management has an absolute right to bar anyone from the premises for any reason at all, or for no reason. When track management finds a convicted illegal gambler on the premises, track security escorts him to the gate and makes sure he's not allowed in. Borel's flouting of the ordinary rules of sportsmanship and civility, notwithstanding the purported apology so obviously drafted by his wife, Lisa, should have earned him no better treatment.

By the way, Javier Castellano, who clearly did start the chain of events by moving his horse to the right without bothering to notice that there was another horse in the way, also waived his right to a hearing and settled for a six-day suspension for careless riding and a $2,500 fine for his part in the brawl, which, as far as I could see, consisted of trying to get away from the crazed Borel.

Moving right along -- we'll ignore the incident when the starting gate crew couldn't figure out which stall in the gate to start with and ended up with one horse left over -- we come to Friday's finale, the Ladies Classic. ESPN was all over this story, with Jerry Bailey noticing problems with Life at Ten as the filly was warming up, and asking John Velazquez about the situation as John was out on the track before the race. ESPN's Randy Moss said later that ESPN had passed along the comments to the stewards before the race. Given that, whether Velazquez said anything to the track vets is immaterial.

A jockey's responsibility in a situation like that is to protect his horse, himself, and the other jockeys and horses in a race. It's not the jockey's job to worry about the betting public. The same is true for a trainer. That's why we have stewards; it's their job to take the interests of the bettors into account, and to protect those bettors from, among other things, the distorting effects of information being available to some, but not all, of the public. In the Ladies Classic, the total handle on the race (excluding the Pick 6 pool, which had already been made moot by longshots in prior races) was about $10.7 million. Since Life at Ten went off at odds of 3.8-1, that implies that she accounted for about 17% of all bets on the race (after taking the takeout rate into account). In other words, roughly $1.8 million was bet on a horse that, as anyone watching ESPN before the race knew, had absolutely no chance. Or, to put it another way, the stewards' failure to act on the information available to them stole $1.8 million from the betting public. Bank robbers who take that much tend to be put away for a very long time indeed.

And it's not as if chief steward John Veitch and his crew didn't have options. They have the authority to order a scratch, or they could have had Life at Ten run for purse money only, with all bets on her refunded. Even after the race, they probably had the authority to have Life at Ten declared a non-starter, again resulting in a refund. Ah, but that would have cost $1.8 million in handle, and we certainly wouldn't want that, would we?

On to Saturday.

Before the Juvenile Turf, we had already heard several comments on the television coverage regarding the state of the Churchill turf course, mostly to the effect that it was very firm underneath, but "pulling away," or words to that effect, on top. Watching the replay of Rough Sailing's fall, it looks exactly like the kind of accident that would occur if the turf surface pulled away as the horse's feet hit the ground. Rough Sailing's left rear just went sideways, toward the outside rail; jockey Rosie Napravnik was lucky to be thrown clear, rather than landing under the horse, and lucky that her horse was toward the outside and toward the rear of the pack, so the following horses didn't fall over her. At least one account of the race said Rough Sailing fell after hitting a "soft spot" in the turf course.

Could it have been just an unlucky accident, with no fault attributable to the turf course? Sure. The horse was going into a turn, and not all horses, especially not lightly raced two-year-olds, necessarily know how to navigate the turns. But where we'd already heard worries about the condition of the turf course, I'd like to see some sort of an investigation that would see if Lehr and his crew had really done all they could to make the course as safe as it should have been for racing's biggest day.

And, finally, on the to embarrassment of losing the national TV feed for 15-20 minutes. The Breeders Cup had already agreed to a silly split-network approach for Saturday, with the first two hours being shown on ABC and the rest scheduled for the main ESPN channel. That's dumb enough to begin with; why make viewers work to change channels and stick with the show? We all know from behavioral economics research that the default option -- in this case, not even bothering to hit the remote control button -- always has its adherents, so it was likely that the BC would lose some viewers with the channel switch even if all had gone well. but, when the appointed hour came, those of us with sufficient motivation to change the channel were greeted with -- football. Michigan and Illinois were seemingly incapable of beating each other, and college football seems to have dispensed with the idea of a tie, so the teams were battling on into a third overtime, still on camera. At some point before the gates opened for the next BC race, at 3:56 pm, the BC was back on ESPN, but one has to think that considerable damage had been done. For some non-negligible number of casual viewers, the combination of having to change channels and then finding the wrong sport when they did change would have been enough to divert them from racing for the rest of the day. Hell of a way to encourage new fans.

Just as it's unfair to blame John Velazquez or Todd Pletcher for the Life at Ten debacle, it's unfair to blame ESPN for the TV interruption. The network's job is to maximize ratings, and I'm sure that sticking with Michigan-Illinois did just that. It was the Breeders Cup management's job to get a TV contract that guaranteed continuous coverage -- preferably on the same channel. They failed, miserably.

I'm teaching a law school course this semester on drafting contracts. One of the things my students, 10 weeks into the semester, already know is how important it is to think through all the contingencies, the what-ifs, that might arise, and to provide for them in the contract. Now, BC President and CEO Greg Avioli has a law degree from a pretty good school (the University of North Carolina), and has actually been a lawyer involved in racing, as general counsel to the National Thoroughbred Racing Association (NTRA). So I have to assume that he knows how to read a contract. But apparently, neither Avioli nor any BC in-house or out-house lawyer thought to cover the perfectly predictable contingency of another event running late on ESPN.

The solution isn't rocket science. ESPN could have shifted the BC to another of its many channels, or it could have shifted the balance of the football game, or ABC could have stayed with the racing coverage until ESPN was available. The point is that it was the Breeders Cup's responsibility to make sure one of those things happened, by providing for it in the TV contract. If you can't do as well as my third-year law students, you shouldn't be drawing down $507,000 a year as head of the BC.

In between the screw-ups, by the way, there was some pretty good racing. Just seems like a hell of a way to run a railroad.

About Me

Steve has managed Castle Village Farm's racing partnerships since 1999, and has been going to the races since the 1950s. He's been active in horsemen's and backstretch welfare organizations and, when he's not at the track, has moonlighted as a tax and trusts and estates lawyer and a law professor.